Cancellation Qualifying Reasons/RC 02

Reason Code 02: Contents Sold, Removed, or Destroyed

This reason code applies when the policyholder no longer has an insurable interest in the contents covered by a flood insurance policy due to their sale, removal, or destruction. This includes situations where contents are permanently relocated, sold, or completely lost due to a peril other than flooding.

Condition	Details
Eligibility for Cancellation	The policyholder had an insurable interest in the insured contents during the policy term but no longer does due to sale, removal, or destruction.
Effective Date of Cancellation	The date the policyholder ceased to have an insurable interest in the contents (e.g., sale date, removal date, or destruction date).
Policy Terms Eligible for Refund	The term in which the policyholder lost insurable interest and subsequent renewed terms, up to 5 years prior to the cancellation request.
Type of Refund	Pro-rata refund (excluding Federal Policy Fee and Probation Surcharge) for the canceled term. Full refund, including surcharges and fees, for eligible renewed terms.
Required Documentation	Evidence of contents sale, removal, or destruction, such as a bill of sale, inventory record, proof of destruction, or a signed statement from the policyholder for residential contents.

This table can be seen on page 6-3 of the FIM.

Additional Guidance

• If there is an open claim related to the contents, the policy cannot be canceled.
• If contents were destroyed by a flood-related peril, standard claims processing should be followed instead of cancellation.
• Cancellation requests missing adequate proof of sale, removal, or destruction may lead to processing delays.

Required Documents

The key factor for this reason code is that the policyholder no longer possesses or has an insurable interest in the insured contents.

• If the policyholder has sold the contents, the effective date should align with the date on the bill of sale or inventory record.
• If contents were permanently removed or relocated, documentation such as a moving company receipt or signed statement from the policyholder may be required.
• If the contents were destroyed, acceptable proof may include photographs, insurance claims documentation, or other verification of loss.

Document Gallery

• Sale/Transfer: Bill of Sale, Inventory Record
• Removal: Moving Company Receipt, Signed Policyholder Statement
• Destruction: Proof of Destruction, Photographs, Insurance Claim Documentation

Scenarios for Context

Scenario 1:
A tenant moves out of a rental property and sells all their furniture. The tenant submits a cancellation request along with a bill of sale listing the sold items, and the policy is canceled effective the date of sale.

Scenario 2:
A homeowner’s contents are destroyed in a house fire. The policyholder provides fire department documentation and an insurance claim report confirming the destruction. The underwriter processes the cancellation effective the date of the loss.

This page contains details about NFIP Cancellations. Find more in the How To Cancel section of the NFIP Flood Insurance Manual.